Mortgage rates have hit their highest since November as the timeline for long-awaited interest rate cuts stretches into 2024.
The average 30-year fixed mortgage rate hit 7.29 percent on Wednesday, the highest reading since November, according to Mortgage News Daily.
The increase followed the release of new consumer price index inflation data for March, which was slightly above economists’ expectations. The data raised concerns that the Federal Reserve would delay interest rate cuts scheduled for 2023.
Mortgage rates have risen significantly since the start of 2022, closely tracking the rise in interest rates set by a committee of Fed officials. The central bank has raised borrowing costs from near zero in March 2022 to a range of 5. 25% to 5.5% last July, and kept rates stable in subsequent meetings.
The average 30-year fixed mortgage rate peaked at 8% in October, according to the Daily Mortgage Index. Mortgage rates fell below 7 percent in December after the Fed signaled several interest rate cuts in 2024, but have risen again as new economic data indicates the fight against inflation has reached a plateau.
A series of still-elevated data on prices, employment and growth pushed back the timeline for cuts in borrowing costs. New government data released on Wednesday revealed a rise in inflation in March, with the index rising 3.5% year-on-year.
High mortgage rates have hit home buyers hard, especially first-time home buyers. To help overcome high borrowing costs, more than a third of homes were purchased with cash in February and the average down payment increased 24.1% from the previous year, according to a recent report from real estate company Redfin, eliminating buyers who cannot afford these options.
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